Must companies pay employees for time they spend lollygagging on the job?

In a recent precedential decision, the Third Circuit Court of Appeals addressed a critical issue for employers: whether they must compensate employees for the actual time spent on work-related activities, even if they are lollygagging. Or can an employer comply with the Fair Labor Standards Act (FLSA) by paying employees a reasonable amount instead?

The case involved an employer that required workers to wear uniforms and, in some cases, additional protective equipment like safety glasses, shoes, hard hats, and respirators. Furthermore, employees must shower after their shifts to remove any contaminants.

The U.S. Department of Labor sued the company for failing to pay employees for all the time spent changing and showering. An expert hired by the government estimated that workers spent an average of 15.6 minutes dressing pre-shift and 11 minutes undressing and showering post-shift, which was more time than they were compensated for. The District Court ruled in favor of the government, and a jury awarded approximately $22.25 million in back pay to 11,780 hourly uniformed workers. The company appealed, and the government cross-appealed the denial of liquidated damages.

Key Takeaways

1. Actual Time vs. Reasonable Time: The Court’s Stance

The Third Circuit unequivocally held that employers must pay employees for the actual time spent on work-related activities, not just a reasonable amount of time. The company argued that compensating employees for a reasonable time to change and shower was sufficient, fearing that focusing on actual time could incentivize employees to drag their feet. However, the court rejected this argument, emphasizing that “the Act’s text focuses on actual time.” Thus, the FLSA mandates payment for all hours worked.

2. Employer’s Recourse for Employee Lollygagging

But couldn’t compensating for actual time encourage employees to waste it? The court addressed this by clarifying that the appropriate recourse for employers is not to withhold compensation but to discipline or terminate employees who are not performing efficiently. The court cited a previous case, stating, “If a worker lollygags, ‘the employer’s recourse is to discipline or terminate the employee—not to withhold compensation.'” This reinforces the principle that employees must be paid for all time worked, and any performance issues should be managed through proper disciplinary procedures rather than adjustments to compensation.

3. Implications for Recordkeeping

This decision also reinforces the importance of meticulous recordkeeping for employers. The FLSA requires employers to maintain accurate records of the hours worked by employees. The court highlighted that estimating hours worked violates the recordkeeping requirement of the FLSA. Therefore, employers must ensure they have robust systems in place to track the actual time employees spend on work-related activities, including preliminary and postliminary tasks such as changing into uniforms and showering. Failure to do so could result in significant liability, as evidenced by the $22.25 million in back pay awarded to the company’s employees.

Conclusion

The Third Circuit’s decision serves as a crucial reminder for local employers about their obligations under the FLSA. (The Third Circuit’s decision is not binding outside of PA, NJ, DE, and the USVI). Human resources professionals and employment lawyers should take note of the court’s emphasis on actual time compensation, the necessity of accurate recordkeeping, and the appropriate methods for addressing employee inefficiencies. By adhering to these guidelines, employers can help ensure compliance with the FLSA and avoid substantial legal and financial repercussions.